Understanding Pre-existing Condition Insurance Plans

This stopgap measure is available until 2014
Author: Rebecca Scherr

Update, July 30, 2013: As of July 1, 2013, the federal government was running the PCIP programs in most states. The 10 states still running their own programs are: Alaska, Connecticut, Maine, Maryland, Montana, New Jersey, New Mexico, Oklahoma, Rhode Island and Wisconsin. For the most recent updates, please visit the official US Government Site for PCIP.

Original article: If you’ve been uninsured for six months or more and haven’t been able to find health insurance coverage, there’s now a plan for you, created as a result of the Affordable Care Act (ACA). However, be forewarned that the plan’s high premiums might keep it out of many people’s reach.

The Pre-existing Condition Insurance Plan (PCIP) is a temporary program to cover legal United States residents who do not qualify for other plans because of pre-existing health conditions. It is a stopgap measure put in place until 2014, when all insurers must cover everyone, regardless of pre-existing medical conditions.

Missing the Mark

JoAnn Volk, research professor and project director at the Georgetown University Health Policy Institute in Washington, DC, says PCIP isn’t meeting its enrollment projections. PCIP was expected to enroll between 200,000 and 375,000 participants. As of March 31, only 61,619 people had signed up nationwide.

The federal government runs PCIPs in 23 states and the District of Columbia; 27 states lead their own programs. The program received $5 billion to fund the plans nationwide from July 2010 to 2014. By the end of March, California reported the largest enrollment at 7,634. In contrast,  Maine, which also has a state-run program, had the lowest enrollment, with 36 participants.

High Costs

“There’s no shortage of people with pre-existing conditions,” Volk says. A 2011 study by the US Department of Health and Human Services (HHS) shows that as many as 129 million Americans under age 65 have a pre-existing condition, such as heart disease, cancer or high blood pressure. Further, 30% of healthy Americans are likely to develop such a condition within the next eight years.

The high cost of PCIP coverage is the main factor in the lower-than-expected enrollment. “People shouldn’t be surprised that cost is an obstacle here,” Volk says. “But PCIP has managed to help people with serious conditions get the help that they need.”

PCIP premiums cost up to several hundred dollars a month and are based on age and location. Some states allow third parties to help with costs. However, other states don’t allow them because of concerns about how hospitals and healthcare providers might benefit financially by covering a patient’s costs and encouraging additional care that’s not necessary.

After observing low enrollment and complaints about high premiums, some states adjusted out-of-pocket costs in May 2011 based on the market premiums of other health insurance plans. As a result, PCIP premiums in 18 states dropped by as much as 40%, according to HHS.

To further increase enrollment, HHS paid agents and brokers in fall 2011 to connect eligible consumers with the program.

PCIPs in the Bleeding Disorders Community 

While the National Hemophilia Foundation (NHF) and its local chapters have identified some uninsured patients who have benefitted from participating in a PCIP plan, only a small percentage of those affected by bleeding disorders get their coverage this way, says Michelle Rice, NHF’s director of public policy. This is most likely because one of the eligibility requirements for PCIP plans is that you be uninsured for at least six months. “People with bleeding disorders can’t afford to be uninsured for that long because the risk is too great,” she says. “Luckily, in most cases, we are able to find other options for the uninsured in our community.”

Before PCIP, Americans who were denied private health insurance coverage because of pre-existing conditions, such as bleeding disorders, had been forced to make do in one of several ways. They had to purchase insurance through the Consolidated Omnibus Budget Reconciliation Act (COBRA), go without insurance or seek coverage through state programs, often high-risk pools. The pools offered coverage to those who could not qualify for coverage elsewhere, usually at a high cost.

Patients who can’t afford a PCIP should check to see if they qualify for Medicaid, which provides free or low-cost coverage to nearly 60 million people who meet low-income or circumstantial requirements. The HHS Web site, InsureKidsNow.gov, can also help parents find health insurance coverage for children.

Next Step: Exchanges

Competitive marketplaces, called American Health Benefits Exchanges, will replace PCIP coverage in 2014, representing another phase of the ACA. The program will provide coverage to millions of uninsured Americans by bringing together private health insurance companies and a government health insurance option to compete among individuals and small businesses. The goal is to lower the cost of health insurance by providing competition.

Exchanges will be more comprehensive than PCIPs, allowing consumers to compare costs and coverage among plans. They will also put a cap on out-of-pocket expenses with federal subsidies. The Congressional Budget Office, which reviews legislative initiatives with budgetary implications, estimates that about 24 million people will buy coverage through the exchanges by 2019.

Until 2014, PCIPs can be an option for people with bleeding disorders who have been uninsured for at least six months.